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Housing for the Elderly: HUD Policy Decisions Delay Section 202 Construction Starts

RCED-91-4 Published: Jan 14, 1991. Publicly Released: Feb 13, 1991.
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Highlights

Pursuant to a congressional request, GAO reviewed the Department of Housing and Urban Development's (HUD) processing of section 202 projects for constructing rental housing for the elderly and handicapped, focusing on: (1) increases in project processing time; (2) the need for additional sponsor contributions to cover project development costs; (3) field offices' interpretation of cost-containment requirements; and (4) field offices' program administration.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Housing and Urban Development To better facilitate the timely completion of section 202 projects, the Secretary of Housing and Urban Development should establish fair-market rents (FMR) for section 202 projects at levels that reflect local rental markets to help improve processing time and also make it more likely that the section 202 program will provide 100-percent sponsor financing for modestly designed housing.
Closed – Implemented
Regulations developed to increase FMR to support market rents were finalized in May 1991. However, the National Affordable Housing Act, November 1991, converts 202 loans to a capital advance program, thus eliminating FMR considerations. Regulations allowing borrowers in the pipeline to convert to the new program have been finalized.
Department of Housing and Urban Development To better facilitate the timely completion of section 202 projects, the Secretary of Housing and Urban Development should ensure that supervisory visits and reviews by HUD headquarters and regional offices are implemented to validate consistent application of cost containment requirements among field offices.
Closed – Implemented
HUD now monitors F.O. processing time. Additionally, random cost containment and modest design reviews are done at any stage of the project's design development phase. Both actions accelerate projects through the pipeline and improve monitoring.

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Topics

Construction costsCost controlFair market valueFederal aid for housingHousing constructionHousing for the disabledHousing for the elderlyLow income housingRental housingRental rates